How Asset Managers Control the Economy?

Imagine you’re buying groceries, paying rent, or simply using your car. In the background, there’s a high chance that a company you’ve never heard of is influencing those transactions. Meet BlackRock, Vanguard, and State Street—the three largest asset managers in the world, collectively overseeing nearly $20 trillion in assets. That’s almost the size of the entire U.S. economy! But what exactly do these asset managers do, and how do they control so much of the global economy?

What is an Asset Manager?

At their core, asset managers invest money on behalf of clients—ranging from pension funds and insurance companies to everyday investors. Their goal? To make more money for their clients through investments. While they technically don’t “own” the money they manage, their control over these vast sums gives them significant influence in global markets.

One of the reasons these asset managers have become so powerful is through index funds—a relatively low-risk way of investing in a broad basket of stocks that track an index (like the S&P 500) instead of trying to pick individual winners.

The Power of Index Funds

Index funds, especially popularized by Vanguard, revolutionized investing. Instead of gambling on the success of one company, investors buy into the entire stock market. This strategy is low-cost, diversified, and has become incredibly popular. BlackRock, Vanguard, and State Street manage most of these funds, and as a result, they collectively own significant stakes in nearly every major public company in the world.

or example, through their index funds, the Big Three control between 3% to 10% of shares in massive companies like Apple, Microsoft, and Amazon. These may sound like small percentages, but they often make BlackRock, Vanguard, and State Street the largest shareholders. This gives them extraordinary influence in corporate governance decisions.

he Quiet Power: Voting Rights

While these asset managers aren’t actively trading stocks every day, their power lies in their ability to vote on crucial corporate decisions—such as who sits on the board of directors, or whether certain mergers should happen. In many cases, investors in these funds delegate their voting rights to these asset managers, meaning BlackRock, Vanguard, and State Street get to decide on behalf of millions of shareholders.

This is where things get interesting. These asset managers tend to vote in line with corporate management, which often prioritizes short-term profits to boost stock prices. By doing so, they influence how companies operate on a global scale.

How BlackRock, Vanguard, and State Street Own Pieces of Each Other

Not only do these asset managers control shares in almost every major company in the world, but they also have stakes in each other. For instance:

Vanguard holds 8.6% of BlackRock’s shares.

BlackRock holds around 4.2% of State Street Corporation’s shares.

State Street holds a 3.9% stake in BlackRock through its funds.

This interlocking ownership further consolidates their power. It’s as if these firms form a tight-knit circle of influence, controlling significant portions of not only the global market but also each other. This dynamic allows them to act as a “block” of influence, leveraging their shared power in the market.

This mutual ownership creates a feedback loop of power. When they vote on corporate decisions, it’s not just about their stake in a single company, but their broader interest in ensuring that the entire system—one they deeply benefit from—remains stable and profitable. The relationship between them further amplifies their combined influence, ensuring that no single player among the Big Three operates completely independently from the others.

Why This Matters: A Global Web of Influence

The interconnected nature of these asset managers raises questions about the level of influence they exert over the global economy. Owning significant chunks of the stock market, controlling corporate decisions, and even holding stakes in each other means that the Big Three are shaping the world in ways that few can fully comprehend.

For example, if BlackRock owns a large portion of shares in both Coca-Cola and Pepsi, it has a vested interest in both companies succeeding. This gives them little incentive to encourage fierce competition between the two companies. Instead, they benefit when the whole market rises, meaning they might favor decisions that ensure long-term market stability over those that promote aggressive innovation or competition.

Universal Ownership: Owning the World

This concept of universal ownership—where asset managers like BlackRock, Vanguard, and State Street own a part of almost everything—means they don’t just influence individual companies. They’re shaping the entire global economy. Their goal is to manage the economy in a way that maximizes the value of their collective investments, which in turn maximizes the value they manage.

In a way, they’ve become “neutral referees” of the corporate world. They don’t want to pick winners and losers; they want the whole system to work smoothly because that benefits their bottom line. This neutral stance might seem appealing, but it often leads to passive support for the status quo rather than pushing for transformative change.

Next time you interact with the economy—whether it’s through your job, buying products, or making an investment—you’re likely engaging with the quiet influence of these asset managers. Their reach is everywhere, shaping the world in subtle yet profound ways.